Hedgeye's Daily Trading Ranges are twenty immediate-term (TRADE) buy and sell levels, with our intermediate-term (TREND) view and the previous day's closing price for each name. Click HERE for a video from Hedgeye CEO Keith McCullough on how to use these risk ranges.

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12/29/15 07:51 AM EST

The Macro Show Replay | December 29, 2015

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12/28/15 02:44 PM EST

Cartoon of the Day: Look Out Below!

"Oil lead the no volume “reflation”/squeeze last week, with WTI up +5.7% week-over-week," Hedgeye CEO Keith McCullough wrote earlier today in a note to subscribers. "It is straight back down -3.5% today after tapping the top-end of our immediate-term $34.97-38.33 risk range (MLPs were +14.4% last wk, but still -32% YTD)."

the macro show

what smart investors watch to win

Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.

‘The Year Nothing Worked’ Says Bloomberg. We Disagree.

Our non-consensus team here at Hedgeye begs to differ. We alerted our subscribers to myriad market opportunities on both the long and short side throughout 2015. Here's a sampling of some of our top calls.

Energy:

What a difference a year or two can make. One of our firm's top contrarian calls included shorting MLPs like Kinder Morgan (KMI) which Fox Business’ Charlie Gasparino named one of the best calls of the year. Since maverick Hedgeye analyst Kevin Kaiser sounded the alarm back in August 2013, shares of KMI have plunged 60%.

To be clear, Kaiser was the lone bear on the stock and bore the brunt of exceedingly harsh criticism and personal attacks from Wall Street analysts and supposed market prognosticators only to be vindicated recently when KMI cut its dividend earlier this month.

Macro:

Another big win (which Wall Street missed) came courtesy of our non-consensus Macro team and their repeated warnings on #Deflation and #GrowthSlowing.

For the record, commodities have collectively fallen over 20% this year with broader deflation consistently confounding the Fed's bullish economic narrative. Watch Hedgeye CEO Keith McCullough laying out the thesis in the video below. (Note the #timestamp: 9/18/2014)

Healthcare:

Our Healthcare team led by Tom Tobin issued a number of prescient calls in battleground stocks like long Athenahealth (ATHN)and short AMN Healthcare Services (AHS). Check out Tobin's recent write-up in Investopedia, titled "Why a Perfect Storm Is Brewing in Healthcare" which lays out his #ACATaper theme which will continue to rock healthcare stocks well into 2016.

Internet & media:

Sector Head Hesham Shaaban had quite a year. In addition to nailing his short calls on Twitter (TWTR) and Pandora (P), his sole long call in the sector, LinkedIn (LNKD),has ripped ever higher even during a tough year for the broader market.

Industrials:

It's been a tough year for the sector and analyst Jay Van Sciver called it. His shorts on Caterpillar (CAT) and Wabtec (WAB) are down -25% and -17% respectively year-to-date.

Gaming, lodging and leisure:

After calling the year-to-date bottom in Macau casino stocks Hedgeye Gaming, Lodging and Leisure head Todd Jordan appropriately advised clients to sit on the sidelines before the stocks ultimately tumbled 10% in November. Meanwhile, the long call on Boyd Gaming (BYD) has been a consistent winner for our team.

For more see on the outlook for Gaming stocks, click the video below.

Financials:

Sector co-heads Jonathan Casteleyn and Josh Steiner nailed the short thesis on Encore Capital Group (ECPG), which is down 33% this year.

Retail:

All year long, Retail Sector Head Brian McGough has been appropriately suspect about the outlook for the sector, even amidst all the Black Friday chest-thumping. Short calls on Tiffany (TIF) have worked out well. The stock is down 30% year-to-date. In the video below, McGough talks about the two stocks he does like in retail.

Contrary to Bloomberg's reporting, there were plenty of investable ideas that "worked" this year, just not on the books that Wall Street was talking up.

* * *

Editor's Note: To learn more about how you can access our institutional research please email sales@hedgeye.com.

This morning we are publishing our updated Hedgeye Financials Sentiment Scoreboard in conjunction with the release of the latest short interest data last night. Our Scoreboard now evaluates over 300 companies across the Financials complex.

The Scoreboard combines buyside and sell-side sentiment measures. It standardizes those measures to an index of 0-100, where 100 is the best possible sentiment ranking and 0 is the worst. Our analysis shows that a contrarian strategy can be employed successfully by taking the other side of stocks with extreme readings in sentiment, either bullish or bearish. Once sentiment reaches these extreme levels, it becomes a very asymmetric setup wherein expectations become too high or too low.

We’ve quantified the tipping points for high and low sentiment. Specifically, we've found that scores of 20 or lower have a positive, average expected return while scores of 90 or greater are more likely to underperform.

Specifically, our backtest of 10,400 observations over a 10-year period found that stocks with scores of 0-10 went on to produce an average absolute return of +23.9% over the following 12-month period. Scores of 10-20 produced an average absolute return of +11.9%. At the other end of the spectrum, stocks with sentiment scores of 90-100 produced average negative absolute returns of -10.3% over the following 12-months.

The first table below breaks the 300 companies into a few major categories and ranks all the components on a relative basis. The second table breaks the group into smaller subsectors and again gives them relative rankings within those subsectors.

The following is an excerpt from our 90 page black book entitled “Betting Against the Herd: Generating Alpha From Sentiment Extremes Across Financials.”

Let us know if you would like to receive a copy of our black book, which explains this system and its applications.

BUYS / LONGS: Financials with extremely low sentiment readings of 20 and below on our index (0-100) show strong average outperformance in absolute and relative terms across 3, 6 and 12 month subsequent durations. Stocks with sentiment ratings of 20 or lower rise an average of +15.1% over the next 12 months in absolute terms.

SELLS / SHORTS: Financials with extremely high sentiment readings of 90 and above on our proprietary sentiment index (0-100) demonstrate a marked tendency to underperform in absolute and relative terms across 3, 6 and 12 month subsequent durations. Stocks with sentiment ratings of 90 or greater fall in value an average of -10.3% over the next 12 months in absolute terms.

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